Upstream Texas - Fall/Winter 2016 - 11

issues into laws written and passed decades
ago, suggests Suzanne Murray, a partner
at Haynes & Boone LLP in Dallas, which is
representing the Texas Independent Producers
& Royalty Owners Association in its effort to
intervene in a lawsuit where environmental
organizations are seeking to impose stricter
standards on oil and gas operations . Even the
law of the most recent vintage that the Obama
administration uses to justify its authority is the
Clean Air Act (CAA) revision, she notes, which
Congress passed in 1990.
"We are dealing with old environmental statutes,"
says Murray. "When an agency tries to regulate in
this world for issues that concern people today,
it is trying to fit a square peg into a round hole,
because those laws were never drafted to deal
with issues such as climate change."
"Through its rulemaking, permitting and other
regulatory actions, the administration is trying
to force through an agenda to regulate areas
such as GHG emissions," Murray says. "Because
the statutory foundation is ambiguous, however,
federal agencies have had mixed success."
One key federal rule that has been cast into
legal limbo is the BLM's hydraulic fracturing
rule, which was struck down by Judge Scott
Skavdahl of the District Court of Wyoming in late
June 2016. Skavdahl, a 2011 Obama appointee,
ruled that, "Congress has not delegated
to Department of the Interior the authority to
regulate hydraulic fracturing. BLM's effort to
do so through the fracking rule is in excess of
its statutory authority and contrary to law . . .
Congress' inability or unwillingness to pass a
law desired by the executive branch does not
default authority to the executive branch to act
independently, regardless of whether hydraulic
fracturing is good or bad for the environment or
the citizens of the United States."
According to Mark Barron, an attorney with
BakerHostetler, who argued the case on behalf of
a coalition including the Independent Petroleum
Association of America (IPAA) and the Western
Energy Alliance, many of the administration's
actions are not necessarily suited products of
careful evaluations addressing a specific public
need requiring added government oversight.
"I don't think it is a coincidence that BLM
initiated its rulemaking effort for hydraulic

fracturing in November 2010, two months
after Gasland was released," Barron says.
"As industry activity ramped up, the public
started to hear more about fracturing and it
became an issue of public concern. Rather than
determine whether concerns were justified,
the administration went ahead and proceeded
with regulatory action because constituents
said it should."
As he considers instructive moments during the
proceedings, Barron recalls urging the court to
back a preliminary injunction 24 hours before
the rule was supposed to go into effect-an
argument that apparently proved effective,
since the injunction was granted.
"We emphasized the lack of communication
between the Washington office that drafted
the rule and the field offices expected to
implement it, as well as the lack of uniformity
between the various state field offices. The
New Mexico state office indicated the rule
would apply to fee parcels within federal units
and other state offices said it would not. We
learned at a meeting in North Dakota that BLM
required additional personnel to administer
the rule, but those people had not been hired
and there was no plan to do so in the near
future. BLM had promulgated this rule and
had an effective implementation date but had
not adequately prepared to administer it and
lacked the resources to do so."

Less Deference
"Whatever your perspective, the court did
some important analysis on the BLM fracturing
rule," Murray says. "It essentially said we
have reached a point where the government
is not getting deference on claims for which
it arguably has no congressional authority."
The U.S. Supreme Court has sent additional
signals to that effect. Barron points to the
June 20, 2016, decision in Encino Motorcars LLC
v. Navarro, a Fair Labor Standards Act case that
he says may mean the nation's top court thinks
regulators' "benefit of the doubt" treatment
has reached its limit.
"The court indicated that when a rulemaking
is not adequately explained or does not
meet the procedural requirements of the
Administrative Procedures Act, then the
agency's  interpretation of its statutory

authority is not entitled to Chevron deference,"
Barron says, referring to a principle derived
from the 1984 ruling for Chevron USA Inc. v.
Natural Resources Defense Council Inc., which
holds that courts should defer to agencies'
statutory interpretations unless they are
"That trend of restricting or limiting the scope
of Chevron deference will have important
implications for the relationship between
the  executive and legislative branches,"
Barron predicts.
Meanwhile, the parade of regulatory action
from the federal government and corresponding
lawsuits shows little sign of slowing. Hufford
points to the EPA's finalized standards under
the CAA's New Source Performance Standards
(NSPS) that are intended to cut emissions of
methane, volatile organic compounds and
toxic air emissions from new, modified and
reconstructed oil and gas industry sources,
as well as a proposal in which the agency
is seeking to obtain industry information to
develop added nationwide regulations on the
same emissions from existing sources.
Hufford agrees that is no small consideration.
"Any reasonable person would have to conclude
that policy decisions directed towards the oil
and gas industry have resulted in the increased
regulatory activity and consequently the
increased litigation around these regulations,
and I see that trend continuing," Hufford said.
Ultimately, executive branch efforts to stretch
statutes beyond the plain meaning of their
respective texts bear a philosophical likeness
to the argument that the U.S. constitution is
a "living" document with a meaning that
changes over time.
"That hits it on the head," Murray says.
"There is an intersection between the
different branches of government and this
tension, with a Congress that will not act, a
very active and proactive executive branch,
and the judiciary branch in the middle,
deliberating about how much deference to
give an agency determination when Congress
did not speak or its meaning is unclear. It
really has kind of come to this perfect
constitutional head."

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Table of Contents for the Digital Edition of Upstream Texas - Fall/Winter 2016

Chairman’s Message
President’s Message
Courts Slow Federal Regulatory Push Against Producers
Industry Outlook: Hard Data Suggest Low Oil Prices on Borrowed Time
Special Infograph: 2016 Texas Oil and Gas Production at a Glance
Legislative Profile: Texas State Representative Larry Gonzales
Regulatory Profile: Kimberly Corley, executive director of the Railroad Commission of Texas
Member Profile: Eugene Garcia, president of Hurd Enterprises, Ltd.
New Members
Calendar of Events
Advertiser Index
Upstream Texas - Fall/Winter 2016 - cover1
Upstream Texas - Fall/Winter 2016 - cover2
Upstream Texas - Fall/Winter 2016 - 3
Upstream Texas - Fall/Winter 2016 - 4
Upstream Texas - Fall/Winter 2016 - 5
Upstream Texas - Fall/Winter 2016 - 6
Upstream Texas - Fall/Winter 2016 - 7
Upstream Texas - Fall/Winter 2016 - Chairman’s Message
Upstream Texas - Fall/Winter 2016 - President’s Message
Upstream Texas - Fall/Winter 2016 - Courts Slow Federal Regulatory Push Against Producers
Upstream Texas - Fall/Winter 2016 - 11
Upstream Texas - Fall/Winter 2016 - 12
Upstream Texas - Fall/Winter 2016 - Industry Outlook: Hard Data Suggest Low Oil Prices on Borrowed Time
Upstream Texas - Fall/Winter 2016 - 14
Upstream Texas - Fall/Winter 2016 - 15
Upstream Texas - Fall/Winter 2016 - Special Infograph: 2016 Texas Oil and Gas Production at a Glance
Upstream Texas - Fall/Winter 2016 - Legislative Profile: Texas State Representative Larry Gonzales
Upstream Texas - Fall/Winter 2016 - Regulatory Profile: Kimberly Corley, executive director of the Railroad Commission of Texas
Upstream Texas - Fall/Winter 2016 - Member Profile: Eugene Garcia, president of Hurd Enterprises, Ltd.
Upstream Texas - Fall/Winter 2016 - New Members
Upstream Texas - Fall/Winter 2016 - Calendar of Events
Upstream Texas - Fall/Winter 2016 - Advertiser Index
Upstream Texas - Fall/Winter 2016 - cover3
Upstream Texas - Fall/Winter 2016 - cover4